FinCEN Advisory FIN-2021-A001 — COVID-19 Health Insurance & Health Care Fraud (Feb. 2, 2021)
Summary
FinCEN's advisory FIN-2021-A001 of February 2, 2021 alerts financial institutions to health insurance and health care frauds tied to the COVID-19 pandemic, against Medicare, Medicaid/CHIP, TRICARE and private insurers, and to fraud on provider relief funds. It lists the schemes seen: unnecessary tests bundled with COVID-19 testing, billing for services not provided, kickbacks, false claims about tests and cures, telefraud and stolen patient data. Red flags include payments far above a provider's expected business, no patient copayments, a facility at a vacant lot or UPS Store address and fast withdrawals of relief money. Case studies cover two New York pharmacy owners charged in a $30 million Medicare scheme and a medical technology company president charged over $69 million in false allergy and COVID-19 testing claims. Banks are asked to cite FIN-2021-A001 in SAR field 2.
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FIN-2021-A001 February 2, 2021
Advisory on COVID-19 Health Insurance-
and Health Care-Related Fraud
While FinCEN has observed a wide range of COVID-19 related fraud, this advisory
primarily focuses on COVID-19-related fraud involving the health care industry.
Introduction
This Advisory should be shared with:
• Chief Executive Officers The Financial Crimes Enforcement Network
(FinCEN) is issuing this advisory to alert financial
• Chief Operating Officers
institutions to health insurance and health care
• Chief Compliance Officers
frauds related to the COVID-19 pandemic. These
• Chief Risk Officers frauds target Medicare, Medicaid/Children’s
• AML/BSA Departments Health Insurance Program (CHIP), and TRICARE
• Legal Departments as well as health care programs provided through
the Departments of Labor and Veterans Affairs
• Cyber and Security Departments
(collectively, “health care benefit programs”) and
• Customer Service Agents private health insurance companies. In addition,
• Bank Tellers the United States government has observed frauds
in connection with COVID-19 relief funds for health
care providers, such as those provided under the
SAR Filing Request:
Paycheck Protection Program and Health Care
FinCEN requests financial institutions Enhancement Act (PPP-HCEA).1 This advisory
reference this advisory in SAR field contains descriptions of COVID-19-related fraud
2 (Filing Institution Note to FinCEN) involving health care benefit programs and health
and the narrative by including the insurance, associated financial red flag indicators,
following key term: “FIN-2021-A001” select case studies, and information on reporting
and select SAR field 34g (health care suspicious activity.
– public or private health insurance).
This advisory is based on FinCEN’s analysis of
Additional guidance for filing SARs
COVID-19-related information obtained from Bank
appears near the end of this advisory.
Secrecy Act (BSA) data, public reporting, and law
enforcement partners. Additional COVID-19-related information is located on FinCEN’s website
at https://www.fincen.gov/coronavirus, which also contains information on how to register for
FinCEN Updates.
1. See Pub. L. No. 116-139.
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F I N C E N A D V I S O R Y
Financial Red Flag Indicators of COVID-19 Health Insurance- and Health
Care-Related Fraud Activity
Law enforcement and financial institutions have detected numerous instances of potential frauds
related to health care benefit programs, health insurance, and COVID-19 health care relief funds.2
Criminals are adapting known health insurance and health care fraud to take advantage of the
pandemic. The following are representative types of this illicit activity:
• Unnecessary services: Ordering or submitting claims for expensive tests or services that do
not test for COVID-19, oftentimes in conjunction with COVID-19 testing, such as medically
unnecessary and expensive respiratory testing, allergy testing, genetic testing, narcotics
screening, or whole-body health assessments,3 or providing testing for services not usually
rendered by the company.
• Billing schemes: Billing for services not provided, or overbilling (e.g., upcoding or unbundling),
when administering or processing COVID-19 testing and treatments.4
• Kickbacks: Paying service providers or purported marketing organizations an illegal kickback or
bribe in exchange for ordering, or arranging for the ordering of, services and testing.
• Health care technology schemes: False and fraudulent representations about COVID-19 testing,
treatments, or cures are used to defraud insurance carriers and to perpetrate fraud on the
financial markets by defrauding investors.5
• Telefraud and telehealth schemes: Collecting beneficiaries’ personally identifiable information (PII),
including Medicare information. Solicitations will often link their requests for information to
COVID-19 treatment and prevention, such as testing or protective equipment. Fraudsters then
submit fraudulent claims for payment from health care benefit programs. Fraudsters have also
used the stolen PII to submit fraudulent telehealth services claims.6
2. For information concerning frauds related to the COVID-19 vaccine, see FinCEN Notice, FIN-2020-NTC4, “FinCEN
Asks Financial Institutions to Stay Alert to COVID-19 Vaccine-Related Scams and Cyberattacks,” (December 28, 2020).
3. See Department of Justice (DOJ) Press Releases, “United States Attorney’s Office Announces Charges in Fraud Cases
Related to COVID-19,” (May 27, 2020) and “Georgia Woman Arrested for Role in Scheme to Defraud Health Care
Benefit Programs Related to Cancer Genetic Testing and COVID-19 Testing,” (May 15, 2020).
4. See DOJ Press Releases, “Two Owners of New York Pharmacies Charged in a $30 Million COVID-19 Health Care
Fraud and Money Laundering Case,” (December 21, 2020); and “United States Attorney’s Office Announces Charges
in Fraud Cases Related to COVID-19,” (May 27, 2020). Upcoding occurs when a provider bills the insurance company
for higher and more expensive levels of medical service than were actually performed. Unbundling fraud occurs
when a provider bills for multiple codes for a group of procedures that are covered in a single global billing code.
5. See DOJ Press Release, “Medical Technology Company President Charged in Scheme to Defraud Investors and Health
Care Benefit Programs in Connection with COVID-19 Testing,” (June 9, 2020). For additional information, including
red flags for fraudulent COVID-19 testing, treatments, and cures, see FinCEN Advisory, FIN-2020-A002, “Advisory on
Medical Scams Related to the Coronavirus Disease 2019 (COVID-19),” (May 18, 2020).
6. See HHS-OIG Fraud Alert, “COVID-19 Fraud is Rapidly Evolving,” (Last update, December 21, 2020) and
“National Telefraud Takedown Scheme” (Current as of September 2020).
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F I N C E N A D V I S O R Y
• Fraudulently obtaining COVID-19 health care relief funds: Filing false claims and applications for
Federal relief funds,7 such as those provided under the Coronavirus Aid, Relief, and Economic
Security (CARES) Act’s Provider Relief Fund,8 the PPP-HCEA,9 or the Economic Impact
Disaster Loan (EIDL) program, and the claim or application has a nexus to health care benefit
programs.10
• Identity theft leading to additional fraud: Targeting beneficiaries for their PII and then using the
stolen PII to commit COVID-19-related fraud against health care benefit programs.11
To discern whether a health insurance fraud is COVID-19-related, financial institutions should
assess whether the activity occurred around or after the Secretary of Health and Human Services’
public health emergency declaration of January 31, 2020,12 and whether the underlying purported
service relates to COVID-19.
As no single financial red flag indicator is necessarily indicative of illicit or suspicious activity,
financial institutions should consider all surrounding facts and circumstances before determining
if a transaction is suspicious or otherwise indicative of potentially fraudulent activities related to
COVID-19. In line with a risk-based approach to compliance with the BSA, financial institutions
also are encouraged to perform additional inquiries and investigations where appropriate.
FinCEN identified the financial red flag indicators described below to alert financial institutions to
fraud related to health insurance and health care, and to assist financial institutions in detecting,
preventing, and reporting suspicious transactions related to such COVID-19-related fraud.
Such financial red flag indicators may include:
Additional, medically unnecessary services or billing schemes
After the COVID-19 public health emergency declaration, a health care service provider’s
account receives or continues to receive: (1) health care benefit program or health insurance
payments well above the provider’s estimated business transactions; or (2) payments at
7. See DOJ Press Releases, “Florida Man Charged with COVID Relief Fraud, Health Care Fraud and Money
Laundering,” (July 29, 2020); “Florida Man Charged with COVID Relief Fraud and Health Care Fraud,” (July 10,
2020); and “Ophthalmologist Previously Charged with Health Care Fraud Indicted For Defrauding SBA Program
Intended To Help Small Businesses During COVID-19 Pandemic,” (June 24, 2020).
8. See U.S. Department of Health and Human Services (HHS), “CARES Act Provider Relief Fund,” (Last reviewed on
January 21, 2021).
9. See Pub. L. No. 116-139. For more information about unemployment insurance fraud, not necessarily connected to the
health care industry, see FinCEN Advisory, FIN-2020-A007, “Advisory on Unemployment Insurance Fraud During the
Coronavirus Disease 2019 (COVID-19) Pandemic,” (October 13, 2020).
10. See Pub. L. No. 116-123 and U.S. Small Business Administration, Information Notice 5000-20037, “Guidance
Regarding Identification and Reporting of Suspicious Activity in the COVID-19 EIDL Loan Program,” (July 22, 2020).
11. See HHS-Office of Inspector General (OIG) Fraud Alert, “COVID-19 Fraud is Rapidly Evolving,” (Last update,
December 21, 2020). For more information about identity theft related to COVID-19 relief efforts, including red
flags, see FinCEN Advisory, FIN-2020-A005, “Advisory on Cybercrime and Cyber-Enabled Crime Exploiting the
Coronavirus Disease 2019 (COVID-19) Pandemic,” (July 30, 2020); and FinCEN Advisory, FIN-2020-A003, “Advisory
on Imposter Scams and Money Mule Schemes Related to Coronavirus Disease 2019 (COVID-19),” (July 7, 2020).
12. See HHS, “Determination that a Public Health Emergency Exists,” (January 31, 2020).
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F I N C E N A D V I S O R Y
the same volume despite an expected diminished activity level during the public health
emergency (e.g., a non-emergency medical transport company receiving higher than expected
payments during stay-at-home orders).
A health care service provider’s account receives health care benefit program or health
insurance payments beyond the expected type or volume of service, based on staffing and
other characteristics of the business (e.g., processing COVID-19 tests when the medical facility
does not typically offer diagnostic services, or the facility is processing a high volume of tests
despite only employing a few medical personnel).
A COVID-19-related health care service provider’s business account has unusual transaction
activities, such as payments for personal or medically irrelevant expenses (e.g., payments to
automobile dealers, travel agents, or retailers of luxury goods).
Potential fraudulent businesses
Following the COVID-19 public health emergency declaration, personal or business accounts,
especially ones that did not previously receive health care-related payments, begin receiving
steep increases in health care benefit program or health insurance payments.
A purported health care service provider’s account receives health care benefit program or
health insurance payments related to COVID-19 services, and then individuals immediately
withdraw the funds in a manner that is not typical for health care businesses (e.g., cashier’s
checks, cash withdrawals, certain types of Automated Clearing House (ACH) transfers, or
domestic and international wire transfers).
After the COVID-19 public health emergency determination, a purported health care
provider’s account does not receive small-dollar check deposits, payments from merchant fee
servicers, or cash payments from patients that would indicate patient copayments. This may
indicate the absence of actual business activity.
A newly formed health care business account has a volume or type of payment that seems
inconsistent with expected levels of activity for such an account.
The physical location of a purported medical facility receiving reimbursements for COVID-19-
related health care services or relief funds is non-existent, a residential address, a commercial
mail receiving agency address (e.g., a UPS Store address), or another non-office building
address (e.g., a purported medical facility is listed as a laboratory, but the physical address is
a vacant lot, car dealership, restaurant, or retail store).
The purported laboratory, health care service provider, or medical service personnel or their
counterparties appear to have a minimal web presence, or one that begins around the time of
the COVID-19 public health emergency declaration.
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F I N C E N A D V I S O R Y
Following the public health emergency declaration, the physical location of a purported medical
facility receiving payments for health care services or relief funds is far from the physical
location of the majority of its patients or the providers purported to be practicing there, unless
the facility is providing appropriate telehealth services (e.g., a purported medical facility located
in a western state receives payments related to patients residing on the East Coast).
Kickbacks and money laundering
After the COVID-19 public health emergency declaration, a health care service provider’s or
other business account begins having overly complex, medical-related transactions involving
multiple counterparties indicative of possible structuring, layering, kickbacks, or fraudulent
medical claims.
A health care service provider’s account makes frequent or unusually large payments
recorded as advertising or marketing expenses, or makes recurring round-dollar payments
to one or multiple individuals in a manner inconsistent with its payroll-related withdrawals.
The payments may reference “director fees,” “consulting fees,” “marketing,” or “business
process outsourcing.”
A health care service provider starts receiving payments from laboratories and health
care services companies, but there is no financial documentation (e.g., operating expense
payments) that the provider rendered legitimate services. When questioned, the provider
indicates that he or she invested in the company and the payments are dividends or payments
for services (e.g., a laboratory pays a physician for services related to a COVID-19 laboratory
test). The tests, however, are not related to the physician’s specialization or do not normally
require a physician’s involvement.
Fraudulently obtaining COVID-19-relief funds13
An account with no previous known association with providing health care services, receives
an unexpected or excessive COVID-19-related payment that appears to be the CARES Act’s
Provider Relief Fund or the PPP-HCEA payments. Shortly after the account receives the deposit,
an individual(s) withdraws the funds via large cash withdrawals, cashier’s checks, wires to an
overseas account, transfers to personal accounts, or payments for non-business expenses.
An account previously associated with providing health care services but that has not been
recently active or appears to be defunct, receives an unexpected or excessive COVID-19-related
payment that appears to be the CARES Act’s Provider Relief Fund or the PPP-HCEA payments.
An account holder receives a substantial amount of reimbursements from health care benefit
programs or health insurance companies for services rendered at the same time that the
account holder receives COVID-19-related unemployment insurance payments.14
13. These red flag indicators pertain only to suspicious activity with a nexus to the health care industry and COVID-19.
For non-health care industry suspicious activities related to COVID-19, please review FinCEN’s prior COVID-19
related advisories and notices located on FinCEN’s website at https://www.fincen.gov/coronavirus.
14. For more information about COVID-19-related unemployment insurance fraud, see FinCEN Advisory,
FIN-2020-A007, “Advisory on Unemployment Insurance Fraud during the Coronavirus Disease 2019 (COVID-19)
Pandemic,” (October 13, 2020).
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F I N C E N A D V I S O R Y
Case Studies
Two Owners of New York Pharmacies Charged in a $30 Million COVID-19
Health Care Fraud and Money Laundering Case15
Federal authorities indicted two owners of several New York-area pharmacies for their alleged
roles in a $30 million health care fraud and money laundering scheme. The indictment alleges
that the defendants acquired control over dozens of New York pharmacies by paying others
to pose as the owners of the pharmacies and hiring pharmacists to pretend to be supervising
pharmacists at the pharmacies, for the purpose of obtaining pharmacy licenses and insurance
plan credentialing. According to the indictment, the defendants used COVID-19 emergency
override billing codes to submit fraudulent claims to Medicare, for which they were allegedly
paid over $30 million for medications that never were purchased by the pharmacies, prescribed
by physicians, or dispensed to patients. The defendants frequently filed such claims during
periods when pharmacies were non-operational, and used doctors’ names on prescriptions
without their permission.
The indictment also alleges that, with the proceeds of the fraud, the defendants engaged
in a complex, money laundering conspiracy where they created sham pharmacy wholesale
companies and fabricated invoices to legitimate pharmaceutical drug purchases. In a first
phase, the defendants conspired with an international money launderer who arranged for
funds to be wired from the sham pharmacy wholesale companies to companies in China for
distribution to individuals in Uzbekistan. The defendants received cash in exchange, provided
for by members of the Uzbekistani immigrant community to an unlicensed money transfer
business for remittance to their relatives in Uzbekistan, minus a commission that was deducted
by the money launderer. In a second phase, when the amount of fraudulent proceeds exceeded
the amount of cash available in the Uzbekistani immigrant community, the defendants directed
the international money launderer to transfer funds back from the sham wholesale companies
to the defendants, their relatives, or their designees, in the form of certified cashier’s checks and
bags of cash. The defendants used the proceeds of the scheme to purchase real estate and other
luxury items.
15. See DOJ Press Release, “Two Owners of New York Pharmacies Charged in a $30 Million COVID-19 Health Care Fraud
and Money Laundering Case,” (December 21, 2020).
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F I N C E N A D V I S O R Y
Medical Technology Company President Charged in Scheme to
Defraud Investors and Health Care Benefit Programs in Connection
with COVID-19 Testing16
The president of a California-based medical technology company allegedly paid kickbacks
and bribes to marketers and doctors to run an allergy screening test for 120 allergens on
every patient regardless of medical necessity. As the COVID-19 pandemic progressed and
many patients in the United States faced difficulty obtaining access to COVID-19 testing, the
company president sought to expand the pre-existing allergy test scheme and capitalize on a
national emergency for financial gain by combining the COVID-19 test with the more expensive
allergy testing which did not identify or detect COVID-19. In addition, the company president
allegedly made false claims to investors concerning the company’s ability to provide accurate,
fast, reliable, and cheap COVID-19 tests. The Fraud Section of the Criminal Division of the
Department of Justice and the U.S. Attorney’s Office for the Northern District of California
charged the individual in connection with his alleged participation in schemes to mislead
investors, to manipulate the company’s stock price, and to conspire to commit health care
fraud in connection with the submission of over $69 million in false and fraudulent claims for
allergy and COVID-19 testing. HHS-OIG, the U.S. Postal Inspection Service, the Federal Bureau
of Investigation, the Veterans Affairs Office of Inspector General, and the Defense Criminal
Investigative Service investigated the case.
Information on Reporting Suspicious Activity
Suspicious Activity Report (SAR) Filing Instructions
SAR reporting, in conjunction with effective implementation of BSA compliance requirements
by financial institutions, is crucial to identifying and stopping health insurance and health care
frauds, including those related to the COVID-19 pandemic. Financial institutions should provide
all pertinent information in the SAR. Following these filing instructions will make it easier for
FinCEN, law enforcement, supervisors, and other relevant government agencies to identify and
utilize the information submitted in the SAR.17
• FinCEN requests that financial institutions reference this advisory by including the key term
“FIN-2021-A001” in SAR field 2 (Filing Institution Note to FinCEN) and the narrative portion
of the SAR to indicate a connection between the suspicious activity being reported and the
activities highlighted in this advisory.
16. See DOJ Press Release, “Medical Technology Company President Charged in Scheme to Defraud Investors and Health
Care Benefit Programs in Connection with COVID-19 Testing,” (June 9, 2020).
17. FinCEN requests that financial institutions only reference this advisory if the suspicious activity relates to the
health care industry and COVID-19. For non-health care industry suspicious activities related to COVID-19,
please review FinCEN’s prior COVID-19 related advisories and notices located on FinCEN’s website at
https://www.fincen.gov/coronavirus.
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• Financial institutions also should select SAR field 34(g) (health care – public or private health
insurance) as the associated suspicious activity type to indicate a connection between the
suspicious activity being reported and COVID-19. Financial institutions should include
additional detail about the type of health care fraud (e.g., Medicare – services not provided)
in the narrative.
• FinCEN requests that financial institutions wishing to report potential health care fraud
unrelated to COVID-19 should not include this advisory’s key term in SAR field 2 or the
SAR’s narrative portion. Instead, please select field 34(g) and detail the activity in the
narrative (e.g. addiction treatment – services not provided; or pain clinic – “marketing” fees).
• Please refer to FinCEN’s May 2020 Notice Related to the Coronavirus Disease 2019
(COVID-19) which contain information regarding reporting COVID-19-related crime, and
remind financial institutions of certain BSA obligations.
For Further Information
Financial institutions should send questions or comments regarding the contents of this advisory to
the FinCEN Regulatory Support Section at frc@fincen.gov.
To report suspected heath care fraud, waste, or abuse within Medicare, Medicaid, CHIP, or the
Marketplaces, please go to the following website to determine the best resource to notify:
https://www.cms.gov/About-CMS/Components/CPI/CPIReportingFraud.
For the general public to report suspected fraud, waste, or abuse in Medicare or Medicaid call the
HHS OIG at 1-800-HHS-TIPS (1-800-447-8477).
The mission of FinCEN is to safeguard the financial system from illicit use,
combat money laundering and its related crimes including terrorism, and
promote national security through the strategic use of financial authorities
and the collection, analysis, and dissemination of financial intelligence.
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